The U.S. Treasury will hold its next monthly auction of 30-year bonds on Sept. 10, and they are expected to be sold at the highest interest rate in a quarter century: 5.24%. Bloomberg reported this on Aug. 13, warning that not only has the total U.S. debt reached the historic high of $40 trillion, but that interest payments on that debt are skyrocketing out of control.
“Interest on the public debt continues to be a key driver of the nation’s budget deficit, with the tally at $1.17 trillion for the fiscal year to date, a 15% increase due in part to higher yields on Treasuries.” At this pace, it is estimated that the gross interest payments on the debt will come in at some $1.4 trillion for the fiscal year, which ends on Sept. 30, 2026. That amounts to 19% of the $7.4 trillion total budget for 2026.
The 2026 net interest payments on the government debt—which subtracts out the investment income the government itself receives from holding Treasuries (such as earnings from trust funds and federal credit programs)—is projected to hit $1.04 trillion (14% of the total budget), according to the Congressional Budget Office, up from $970 billion in 2025, the Peterson Foundation reports.
The Bloomberg report takes note of a political side effect of the situation ("It’s a headache for President Donald Trump and Treasury Secretary Scott Bessent ahead of midterm elections in November"), but also points to the potential for a major financial shipwreck:
“The market consensus is that when the Treasury does move to bigger fixed-income auctions, it will likely focus on shorter-maturity notes that mature in two- to seven-years. That would be an extension of its current maturity-shortening strategy, where officials have adjusted issuance toward bills which mature in a year or less. Doing so sidesteps the higher yields on longer tenors but increases refinancing risks.”
But that strategy only brings the underlying problem closer, the article admits, quoting John Fath, a managing partner at BTG Pactual Asset Management US LLC: “The only clear solution I see, is the US government tightening its budget. The whole game plan of trying to move issuance up to the front end: You can only do that so much, right? Then it becomes what I would call irresponsible.”
